Attached files
| file | filename |
|---|---|
| EXCEL - IDEA: XBRL DOCUMENT - AQUENTIUM INC | Financial_Report.xls |
| EX-32.1 - CERTIFICATION - AQUENTIUM INC | aqnm_ex321.htm |
| EX-31.1 - CERTIFICATION - AQUENTIUM INC | aqnm_ex311.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the quarterly period ended March 31, 2012
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
From transition period from ____ to ____
Commission File No.: 000-23402
|
AQUENTIUM, INC.
(Exact name of registrant as specified in its charter)
|
|
Delaware
|
11-2863244
|
|
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
|
5188 Western Way, Perris, California
|
92571
|
|
| (Address of principal executive offices) | (Zip Code) |
(951) 657-8832
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.:
|
Large accelerated filer
|
o |
Accelerated filer
|
o |
| Non-accelerated filer | o | Smaller reporting company | x |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes x No
As of May 11, 2012, the registrant had 46,457,403 shares of common stock outstanding.
TABLE OF CONTENTS
| PART I – FINANCIAL INFORMATION | |||||
| Item 1: |
Financial Statements
|
3 | |||
|
Consolidated Balance Sheets as of March 31, 2012 (Unaudited) and September 30, 2011 (Audited)
|
4 | ||||
|
Consolidated Statements of Operations for the Three and Six Months Ended March 31, 2012 and 2011 (Unaudited) and from inception (April 30, 2001) to March 31, 2012
|
5 | ||||
|
Consolidated Statements of Cash Flows for the Three and Six Months Ended March 31, 2012 and 2011 (Unaudited) and from inception (April 30, 2001) to March 31, 2012
|
6 | ||||
|
Notes to Consolidated Financial Statements (Unaudited)
|
8 | ||||
| Item 2: |
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
13 | |||
| Item 3: |
Quantitative and Qualitative Disclosures about Market Risk
|
15 | |||
| Item 4T: |
Controls and Procedures
|
15 | |||
| PART II – OTHER INFORMATION | |||||
| Item 6: |
Exhibits
|
16 | |||
| Signatures | 17 | ||||
2
PART I – FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
The financial information set forth below with respect to our statements of operations for the three months period ended March 31, 2012 and 2011 is unaudited. This financial information, in the opinion of management, includes all adjustments consisting of normal recurring entries necessary for the fair presentation of such data. The results of operations for the six month period ended March 31, 2012, are not necessarily indicative of results to be expected for any subsequent period. Our year end is September 30.
3
AQUENTIUM, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
|
March 31
|
September 30,
|
|||||||
|
2012
|
2011
|
|||||||
|
(Unaudited)
|
(Audited)
|
|||||||
|
ASSETS
|
||||||||
|
Current assets
|
||||||||
|
Cash
|
$ | 15 | $ | -- | ||||
|
Total current assets
|
15 | -- | ||||||
|
Total assets
|
$ | 15 | $ | -- | ||||
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
||||||||
|
Current liabilities
|
||||||||
|
Bank overdraft
|
$ | -- | $ | 16 | ||||
|
Accounts payable
|
42,251 | 34,830 | ||||||
|
Accrued interest
|
54,548 | 48,528 | ||||||
|
Accrued expense- litigation
|
177,247 | 177,247 | ||||||
|
Advances-related party
|
191,824 | 188,774 | ||||||
|
Accrued rent-related party
|
144,000 | 115,200 | ||||||
|
Salaries payable- related party
|
1,595,357 | 1,475,357 | ||||||
|
Total current liabilities
|
2,205,227 | 2,039,952 | ||||||
|
Total liabilities
|
2,205,227 | 2,039,952 | ||||||
|
Stockholders’ deficit
|
||||||||
|
Preferred shares, par value $0.00001
|
||||||||
|
10,000,000 authorized; none issued and outstanding
|
-- | -- | ||||||
|
Common stock, par value $0.005
|
||||||||
|
authorized 100,000,000 shares,
|
||||||||
|
issued and outstanding 46,457,403
|
||||||||
|
as March 31, 2012 and 46,457,403 as of
|
||||||||
|
September 30, 2011
|
232,287 | 232,287 | ||||||
|
Additional paid-in capital
|
952,471 | 952,471 | ||||||
|
Accumulated deficit during development stage
|
(3,389,970 | ) | (3,224,710 | ) | ||||
|
Total stockholders’ deficit
|
(2,205,212 | ) | (2,039,952 | ) | ||||
|
Total liabilities and stockholders’ deficit
|
$ | 15 | $ | -- | ||||
The accompanying notes are an integral part of the consolidated financial statements.
4
AQUENTIUM, INC. AND SUBSIDIARIES
(A DEVELOPMENT-STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
From
|
||||||||||||||||||||
|
Inception
|
||||||||||||||||||||
|
(April 30,
|
||||||||||||||||||||
|
Three Months
|
Six Months |
2001) to
|
||||||||||||||||||
|
Ended March 31,
|
Ended March 31, |
March 31,
|
||||||||||||||||||
|
2012
|
2011
|
2012
|
2011
|
2012
|
||||||||||||||||
|
Income
|
$ | -- | $ | 5,000 | 5,025 | $ | 5,000 | $ | 10,025 | |||||||||||
|
Cost of goods sold
|
-- | -- | (1,384 | ) | -- | (1,384 | ) | |||||||||||||
|
Gross margin
|
-- | 5,000 | 3,641 | 5,000 | 8,641 | |||||||||||||||
|
Selling, general and administrative expenses
|
81,785 | 83,203 | 164,433 | 163,870 | 4,981,767 | |||||||||||||||
|
Impairment loss
|
-- | -- | -- | 15,000 | ||||||||||||||||
|
Depreciation
|
-- | -- | -- | -- | 3,973 | |||||||||||||||
|
Loss from operations
|
(81,785 | ) | (78,203 | ) | (160,792 | ) | (158,870 | ) | (4,992,099 | ) | ||||||||||
|
Other income (expense)
|
||||||||||||||||||||
|
Other Income
|
-- | -- | -- | -- | 1,877 | |||||||||||||||
|
Gain on debt settlement
|
-- | -- | 1,533 | 1,553 | ||||||||||||||||
|
Gain on sale of investment /business
|
-- | -- | -- | -- | 370,000 | |||||||||||||||
|
Rental income
|
-- | -- | -- | -- | 1,471,279 | |||||||||||||||
|
Expense- litigation settlement
|
-- | -- | -- | -- | (177,247 | ) | ||||||||||||||
|
Interest expense
|
(3,010 | ) | (3,010 | ) | (6,020 | ) | (6,020 | ) | (65,332 | ) | ||||||||||
|
Total other income (expense)
|
(3,010 | ) | (3,010 | ) | (4,467 | ) | (6,020 | ) | 1,602,130 | |||||||||||
|
Net loss
|
$ | (84,795 | ) | $ | (81,213 | ) | (165,259 | ) | (164,890 | ) | $ | (3,389,969 | ) | |||||||
|
Loss per common share
|
||||||||||||||||||||
|
Basic
|
$ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | ||||||||
|
|
||||||||||||||||||||
|
Basic weighted average number
|
||||||||||||||||||||
|
of common shares outstanding
|
46,457,403 | 46,457,403 | 46,457,403 | 46,457,403 | ||||||||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
5
AQUENTIUM, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
Three Months
|
From inception(April 30, 2001)
|
|||||||||||
|
Ended March 31,
|
to March 31,
|
|||||||||||
|
2012
|
2011
|
2012
|
||||||||||
|
Cash Flows From Operating Activities:
|
||||||||||||
|
Net loss
|
$ | (165,259 | ) | $ | (164,890 | ) | $ | (3,389,969 | ) | |||
|
Adjustments to reconcile net loss to
|
||||||||||||
|
net cash used in operating activities:
|
||||||||||||
|
Depreciation
|
-- | -- | 3,973 | |||||||||
|
Stock for services
|
-- | -- | 715,755 | |||||||||
|
Stock for joint venture
|
-- | -- | 6,000 | |||||||||
|
Gain on exchange of stock
|
-- | -- | (370,000 | ) | ||||||||
|
Disposition of subsidiary
|
-- | -- | 18,465 | |||||||||
|
Stock option compensation
|
-- | -- | 100,000 | |||||||||
|
Impairment expenses
|
-- | -- | 18,638 | |||||||||
|
Changes in operating assets and liabilities:
|
||||||||||||
|
Bank overdraft
|
(16 | ) | -- | (16 | ) | |||||||
|
Accrued rent
|
28,800 | 28,800 | 144,000 | |||||||||
|
Accrued expense-litigation payable
|
-- | -- | 177,247 | |||||||||
|
Accounts payable
|
7,420 | 945 | 43,054 | |||||||||
|
Accrued interest
|
6,020 | 6,020 | 66,473 | |||||||||
|
Salaries payable-related party
|
120,000 | 120,000 | 2,012,253 | |||||||||
|
Net cash used in operating activities
|
(3,035 | ) | (9,125 | ) | (454,127 | ) | ||||||
|
Cash Flows From Investing Activities:
|
||||||||||||
|
Investment in joint venture
|
-- | -- | (15,000 | ) | ||||||||
|
Purchase of fixed assets
|
-- | -- | (3,973 | ) | ||||||||
|
Net cash used in investing activities
|
-- | -- | (18,973 | ) | ||||||||
|
Cash Flows From Financing Activities:
|
||||||||||||
|
Bank overdraft
|
-- | -- | 16 | |||||||||
|
Note payable-related party
|
-- | -- | 134,960 | |||||||||
|
Advances – related party
|
3,050 | 14,125 | 328,639 | |||||||||
|
Capital contribution – founder
|
-- | -- | 500 | |||||||||
|
Capital contribution – office space
|
-- | -- | 9,000 | |||||||||
|
Net cash provided by financing activities
|
3,050 | 14,125 | 473,115 | |||||||||
|
Net increase in cash
|
15 | 5,000 | 15 | |||||||||
|
Cash at beginning of period
|
-- | -- | -- | |||||||||
|
Cash at end of period
|
$ | 155 | $ | 5,000 | $ | -- | ||||||
The accompanying notes an integral part of the consolidated financial statements.
6
AQUENTIUM, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued
(Unaudited)
|
Six Months
|
From inception(April 30, 2001)
|
|||||||||||
|
Ended March 31,
|
to March 31,
|
|||||||||||
|
2012
|
2011
|
2012
|
||||||||||
|
Non-Monetary Transactions
|
||||||||||||
|
Stock for debt settlement 5,292,549 shares
|
||||||||||||
|
issued at $0.0255 and $0.02 per share respectively
|
$ | -- | $ | -- | $ | 135,000 | ||||||
|
Stock for interest 467,631
|
||||||||||||
|
shares issued at $0.0255 per share
|
$ | -- | $ | -- | $ | 11,925 | ||||||
|
Stock for officer salaries payable 7,039,820 and 3,000,000 shares respectively
|
||||||||||||
|
shares issued $0.0255 and $0.02 per share respectively
|
$ | -- | $ | -- | $ | 239,515 | ||||||
|
Stock for licensing agreement 100,000
|
||||||||||||
|
shares issued at $0.06 per share
|
$ | -- | $ | -- | $ | 6,000 | ||||||
|
Stock for acquisitions 1,150,000
|
||||||||||||
|
shares issued at $0.02 per share
|
$ | -- | $ | -- | $ | 23,000 | ||||||
|
Stock issue for salary 3,000,000
|
||||||||||||
|
shares issued at $0.02 per share
|
$ | -- | $ | -- | $ | 60,000 | ||||||
|
Stock for patent pending 4,000
|
||||||||||||
|
shares issued at 1.00 per share
|
$ | -- | $ | -- | $ | 4,000 | ||||||
|
Reduction of liability to a related
|
||||||||||||
|
party by an exchange in investment
|
$ | -- | $ | -- | $ | 375,000 | ||||||
The accompanying notes are an integral part of the consolidated financial statements.
7
AQUENTIUM, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1- BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of the Company's management, all adjustments (consisting of normal accruals) considered necessary for a fair presentation of these financial statements have been included.
The results for the periods presented are not necessarily indicative of the results for the full year and should be read in conjunction with the audited consolidated financial statements for the year ended September 30, 2011 included in our Annual Report on Form 10-K, filed on December 28, 2011.
NOTE 2- GOING CONCERN
The Company's financial statements are prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has an accumulated deficit of $3,389,970 and has limited revenues to cover its operating costs. This uncertainty raises substantial doubt about the Company's ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on additional sources of capital and the success of the Company's plan. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from the outcome of this uncertainty.
NOTE 3 - BUSINESS DESCRIPTION
A. Business
Aquentium, Inc. (a Delaware corporation) is a diversified holding company in the development stage. (See Note 4B "Development Stage Company"). Its holdings include a solar energy company for solar farms, residential and commercial buildings (Aquentium Solar, Inc.), a company for research and development of algae energy projects, (New American Energy, Inc.), a Waste-To-Energy company for the development of waste-to-energy projects and recycling systems (Environmental Waste Management, Inc.), a housing company for the development of emergency and re-deployable housing structures (H.E.R.E. International, Inc.), an early-stage entertainment company that for the development of motion pictures, music, print publications, and consumer products (Canby Group, Inc.), and (Aquentium De Mexico) for any housing, energy, and water treatment business done in the Country of Mexico. The subsidiaries were not active during the period ending March 31, 2012.
NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its subsidiaries. There was no activity in any of the subsidiaries.
8
AQUENTIUM, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
B. Development-Stage Company
The accompanying consolidated financial statements have been prepared in accordance with Financial Accounting Standards Board’s Accounting Standard Codification (FASB ASC) 915-205 “Development-Stage Enterprises". A development-stage enterprise is one in which planned principal operations have not commenced or if its operations have commenced, there has been no significant revenue there from. Development-stage companies report cumulative costs from the enterprise’s inception.
C. Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
D. Loss per Share
Basic earnings (loss) per share includes no dilution and is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Dilutive earnings (loss) per share reflect the potential dilution of securities that could share in the earnings of the Company. Dilutive earnings (loss) per share are equal to that of basic earnings (loss) per share as the effects of stock options and warrants have been excluded as they are anti-dilutive.
E. Revenue Recognition
The Company recognizes revenue upon shipment of a product to the customer or upon completion of the service the Company is providing.
NOTE 5 - RECENT ACCOUNTING PRONOUNCEMENTS
In April 2010, the FASB issued ASU No. 2010-17, "Revenue Recognition - Milestone Method (Topic 605): Milestone Method of Revenue Recognition" (codified within ASC 605 - Revenue Recognition). ASU 2010-17 provides guidance on defining a milestone and determining when it may be appropriate to apply the milestone method of revenue recognition for research or development transactions. ASU 2010-17 is effective for interim and annual periods beginning after June 15, 2010. The adoption of ASU 2010-17 is not expected to have any material impact on our financial position, results of operations or cash flows.
In May 2010, the FASB (Financial Accounting Standards Board) issued Accounting Standards Update 2010-19 (ASU 2010-19), Foreign Currency (Topic 830): Foreign Currency Issues: Multiple Foreign Currency Exchange Rates. The amendments in this Update are effective as of the announcement date of March 18, 2010. The Company does not expect the provisions of ASU 2010-19 to have a material effect on the Company's financial position, results of operations or cash flows of the Company.
9
AQUENTIUM, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 6 - STOCK ISSUED
During the year ended September 30, 2010, the Company issued 1,100,000 shares of its common stock to two individuals for services with a value of $45,000 ($0.04 to $0.05 per share). One individual may be further compensated with the company’s common stock based on the sales made by that individual for the Company.
NOTE 7- RELATED PARTY TRANSACTIONS
Mark T. Taggatz, President, CEO and Chairman of the Board had the following transactions with the Company:
|
a)
|
Mr. Taggatz is the majority shareholder and an officer and director of Ozone Safe Food (OSF). Through OSF, Mr. Taggatz has advanced funds to pay for expenses on behalf of the Company. Mr. Taggatz and affiliates have a total outstanding balance of $191,824 as of March 31, 2012.
|
|
b)
|
The Company recorded compensation of $120,000 as salary payable for the six month periods ending March 31, 2012 and 2011 which are accrued but not paid. Total salaries payable as of March 31, 2012 and September 30, 2011 was $1,595,357 and $1,475,357 respectively.
|
|
c)
|
The Company entered into a lease agreement with Sani Dri and has accrued rent payable of $144,000 as of March 31, 2012. (See Note 12 “Lease Agreement”). Sani Dri is a Company Mr. Taggatz controls.
|
NOTE 8 - ACCRUED INTEREST
As a result of arbitration during the fiscal year 2007, a former landlord was awarded a judgment against the Company totaling $177,247. The Company is accruing interest on the judgment at an annual rate of seven percent on the outstanding balance. During the six month period ended March 31, 2012 the Company accrued interest of $6,020 for the outstanding judgment resulting in total interest accrued as of March 31, 2012 of $54,548. (See Note 9: Commitments and Contingencies)
NOTE 9- COMMITMENTS AND CONTINGENCIES
Effective September 1, 2004, the Company exercised an option to lease 84,772 square feet of building space on an average monthly basis of $31,897 per month. The Company was assigned the lease rights of the other tenants in the building and collected rents from those tenants. For the years ending September 30, 2009 and 2008, the Company recorded no lease expenses in connection with these leases. The Company had an option to purchase the building for $5.1 million. The largest tenant in the building was eFoodsafety.com.
10
AQUENTIUM, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
During the year ended September 30, 2007, the Company was party to an arbitration hearing with the landlord pertaining to the lease of the building and the sub-lease of portions of the building to its sub-tenants. On April 11, 2007, the arbitrator granted legal fees to the landlord in the amount of $47,000. On April 19, 2007 and June 29, 2007, amended notices of ruling were heard by the Superior Court of California, County of Riverside resulting in a judgment awarded on September 21, 2007 to the landlord of $146,917 including fees and interest. Additionally, on August 17, 2007, the landlord received a judgment against the Company of $29,692 pertaining to termination of the Company’s occupancy of the building.
The Company is a plaintiff in suits against the individual sub-tenants pertaining to rent withheld by the sub-tenants. No determination of these cases has been concluded. As of March 31, 2012, $177,247 for the judgment plus accrued interest of $54,548 has been accrued by the Company for a total liability of $231,795.
On February 2, 2010 the Company entered into agreements with two municipalities in China to convert waste material into energy. Under the terms of the agreement the municipalities would provide the waste material to the Company, land for the Company to build the conversion plant and buy the resulting energy produced from the Company. These projects will require substantial funding which must be arranged and provided by the Company along with the conversion plant construction and operations. As of this date no activity beyond the signing of the agreements has been completed.
On March 1, 2010, the Company signed a consulting agreement with an individual giving the individual 100,000 shares of common stock with a value of $5,000. Under the terms of the agreement the individual can earn additional shares of the Company stock plus commissions based on the sales initiated by the individual.
NOTE 10 – JOINT VENTURES
In March 2004, Aquentium entered into 50/50 joint venture. Aquentium Hong Kong, Ltd., a Chinese limited liability company, was formed to manufacture market and sell Aquentium's products and/or services, if any, in Asia for a period of 10 years. As of March 30, 2012, the joint venture had no further activity.
On August 18, 2008, the Company signed a business development agreement with Megaros, Inc. Under the terms of the agreement Megaros will receive commissions starting at five (5) percent of the first $1,000,000 of sales and decreasing one (1) percent for each $1,000,000 of additional sales of the Company’s products.
On July 28, 2009, the Company signed a joint venture agreement with an individual for the production and harvesting of algae on property owned by the individual. Under the terms of the agreement the Company is required to raise substantial capital within twenty four months of the date of the agreement plus manage the joint venture on behalf of both parties. The Company was obligated to a one-time fee of $15,000, which has been paid, plus an annual fee of $250,000 payable to the individual, once production commences. As there has been no activity and the obligation of the Company has not been met, the Company impaired the investment of $15,000 at September 30, 2010.
11
AQUENTIUM, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 11 - LEASE AGREEMENT
On October 1, 2009, the Company entered into a lease agreement with Sani-Dri, Sani-Dri is controlled by the wife of Mr. Taggatz. The Company has exclusive distribution territories for the Sani-Dri ozone hand dryer. Under the terms of the agreement the Company is subleasing 8,000 square feet of commercial office and warehouse space for three years. They will pay the affiliate rent of $4,000 per month through the year ending September 30, 2010; $4,800 per month for year two ending September 30, 2011 and $6,000 per month for year ending September 30, 2012.
12
Reference in this report to “Aquentium’” “we,” “us,” and “our” refer to Aquentium, Inc. and its subsidiaries.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
The Securities and Exchange Commission (“SEC”) encourages companies to disclose forward-looking information so that investors can better understand future prospects and make informed investment decisions. This report contains these types of statements. Words such as “may,” “expect,” “believe,” “anticipate,” “estimate,” “project,” or “continue” or comparable terminology used in connection with any discussion of future operating results or financial performance identify forward-looking statements. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report. All forward-looking statements reflect our present expectation of future events and are subject to a number of important factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.
ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Executive Overview
Aquentium, Inc. is a holding company of six wholly-owned subsidiaries and we have interests in joint ventures, as well as business opportunities related to ozone equipment and structural insulated panels. During the past year, we have actively expanded our focus into providing green technologies and solutions to businesses throughout the world. We are expanding our business in the area of alternative energy and are currently pursuing Waste-to-Energy projects throughout the world as well as the production of algae bio-fuels. We have been focused on bringing Waste-to-Energy solutions to the countries in Europe, South America, Asia and the country of Mexico. Management is very optimistic about the worldwide demand for such technology.
On a daily basis Aquentium plans to sell and market our complete line of ozone sanitation equipment. This technology is designed for use in food processing, beverage processing, hotels, schools, hospitals, and veterinarian clinics. In addition to our distributors, the company also markets directly to these industries.
As of the date of this filing we have minimal operations and have recorded minimal revenues for the past two years. Our focus for the next twelve months will be to obtain additional funding to develop and expand our operations and new projects. Our success will depend on our ability to obtain funding through equity and/or debt transactions. However, with the downturn of the United States and world economies, we will encounter substantial competition for the limited financing that will be available in the market place. If we are unable to obtain financing, then we will likely delay further business development of any of our products, marketing and other projects and joint ventures. Potential investors must recognize that we have limited capital available for the development of our business plan and all risks inherent in a new and inexperienced enterprise are inherent in our plan to launch operations.
In summary, management continues to position the company in a way to best benefit from worldwide economic conditions, trends, events, and demand for new technologies.
13
Liquidity and Capital Resources
From inception (April 30, 2001) to March 31, 2012, we had an accumulated deficit of $3,389,970. We recorded a net loss of $ 84,795 and $165,259 for the three and six months ending March 31, 2012 and $81,213 and 164,890 for the same period in 2011. The loss was minimal in 2012 over 2011. Based on these numbers there is substantial doubt that we can continue as a going concern unless we obtain external funding. Management plans to continue limited operations until we obtain additional funding to expand our operations.
Working capital is a negative $2,205,212 as of March 31, 2012 compared to a negative $ 2,039,952 as of September 30, 2011. Cash used in operations totaled $3,035 during the period ending March 31, 2012 compared to $9,125 during the same period in 2011. Funds provided from financing activities were $3,050 in 2012 compared to $14,125 during the same period in 2011.
During the past two fiscal years we have relied primarily on related party advances and loans and the issuance of our common stock to satisfy our cash requirements. During the six month period ended March 31, 2012 we have received advances from our President, Mark T. Taggatz, who has a total outstanding balance of $175,187plus an outstanding balance of $16,637 from Ozone Safe Food, Inc., a related party. The advances are used for operational expenses in the normal course of business. We anticipate that Mr. Taggatz or our affiliates may provide advances in the future; however, we have not entered into written agreements with any person and, therefore, no one is obligated to provide advances to us.
Management expects to continue to issue common stock to pay for acquisitions, services and agreements. Any issuance of common stock will likely be pursuant to exemptions to the registration requirements provided by federal and state securities laws. The purchasers and manner of issuance will be determined according to our financial needs and the available exemptions. We do not currently intend to make a public offering of our stock. We also note that if we issue more shares of our common stock our shareholders may experience dilution in the value per share of their common stock.
We intend to rely on debt and equity financing, capital contributions from management and sales of our common stock to pay for costs, services, operating leases, litigation expense and future development of our business opportunities. Accordingly, our focus for the next twelve months will be to obtain additional funding through debt or equity financing, but as of the date of this filing we have not finalized agreements for additional funding. Our success in obtaining funding will depend upon our ability to sell our common stock or borrow on terms that are financially advantageous to us. If we are unable to obtain financing, then expansion of our operations will be delayed and our subsidiaries may remain inactive.
Results of Operations
We recorded revenue of zero and $5,025 in the three and six months ending March 31, 2012 compared to zero and $5,000 during the same periods in 2011. Cost of goods during the period ending March 31, 2012 was $1,384 compared to zero for the same period in 2011. The general and administrative expense during the three and six months ended March 31, 2012 were $81,785 and $164,433 compared to $83,203 and $163,870 for the same periods in 2011. Management anticipates our general and administrative expenses will increase when we launch full operations related to the business opportunities we are currently investigating. Interest expense totaled $3,010 for the three months and $6,020 for the six months ended March 31, 2012 compared to $3,010 and $6,020 in 2011. Management anticipates net losses will continue over the next two to three years as we develop our operations.
14
Off-Balance Sheet Arrangements
None.
Commitments and Contingent Liabilities
Prior to the 2007 year, we leased the Tennant Desert property in North Palm Springs, California. We subleased portions of this building and received rental income from the subleases. Due to a dispute with the landlord of the Tennant Desert property in August 2007, we moved to a new office. As a result of the legal action brought by the landlord, a judgment was filed against Aquentium and we have recognized an accrued a liability of $177,247, plus interest of $54,548 for a total of $231,795, related to the judgment awarded to the landlord of the Tennant Desert property.
On July 28, 2009, Aquentium entered into a joint venture agreement with Clinton Jim, an individual, to produce and harvest algae on 475.450 acres of land located near Standing Rock, New Mexico. Mr. Jim agreed to provide the land and Aquentium agreed to secure funding for the proposed budget of $44 million (US) for the development of this project. Under the agreement Aquentium provided an initial capital contribution of $15,000 to secure the use of the land and Aquentium agreed to manage the business operations. Also, Mr. Jim will receive an annual payment of $250,000 once production begins. If Aquentium fails to raise the necessary funding within 24 months of the effective date of the agreement, the joint venture agreement will become void. The joint venture agreement may be terminated by an agreed buyout, or expiration of its term, through July 27, 2108. As of the date of this filing, we have contributed $15,000 to secure the use of the land, but have not raised the necessary funds to move forward with this project. The $15,000 was impaired in the fiscal ended December 31, 2010.
On February 2, 2010 the Company entered into agreements with two municipalities in China to convert waste material into energy. Under the terms of the agreement the municipalities would provide the waste material to the Company, land for the Company to build the conversion plant and buy the resulting energy produced from the Company. These projects will require substantial funding which must be arranged and provided by the Company along with the conversion plant construction and operations. As of this date no activity beyond the signing of the agreements has been completed.
On July 21, 2010, the Company entered into a joint venture with a company for construction waste to energy plants in Canada. Under the terms of the agreement the Company is responsible for the design and construction of the plants along with financing 50% of the joint venture. These projects may require substantial funding by the Company before any benefits are derived from the joint venture.
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 4: CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our filings under the Exchange Act is recorded, processed, summarized and reported within the periods specified in the rules and forms of the SEC. This information is accumulated to allow timely decisions regarding required disclosure. Our Chief Executive Officer, who also acts in the capacity of principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report and based on that evaluation he concluded that our disclosure controls and procedures were effective.
15
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Management conducted an evaluation of the effectiveness of our internal control over financial reporting and determined that there were no changes made in our internal control over financial reporting during the second quarter of our 2010 fiscal year that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
PART II – OTHER INFORMATION
ITEM 6. EXHIBITS
| No. | Description | |
| 31.1 | Chief Executive Officer Certification | |
| 31.2 | Principal Financial Officer Certification | |
| 32.1 | Section 1350 Certification |
|
101.INS **
|
XBRL Instance Document
|
|
|
101.SCH **
|
XBRL Taxonomy Extension Schema Document
|
|
|
101.CAL **
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
101.DEF **
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
101.LAB **
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
101.PRE **
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
_________
** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| AQUENTIUM, INC. | |||
|
Date: May 11, 2012
|
By:
|
/s/ Mark T. Taggatz | |
| Mark T. Taggatz | |||
| President | |||
| Chief Executive Officer | |||
| Principal Financial and Accounting Officer | |||
17