The Company was incorporated under the name Creative Learning Products, Inc. in the
State of New Jersey on August 31, 1988 and changed its name to Creative Gaming, Inc. in
May 1997. The Company changed its name to Management Services, Inc. in October 2006. In
August 2008, the Company changed its name to Centriforce Technology Corp. In May 2010, the
Company changed its name to its current name, ADB International Group, Inc.
Since January 1, 2010, the date the Company re-entered the development stage, we have been
engaged in the water treatment industry. Since June 2008, we began working to develop a
new line of water desalination products. We have not generated any revenues from our water
desalination product development efforts. As a result, during late 2011 into early 2012,
we determined that it would be in the best interests of our shareholders to devote our
limited financial and personnel resources to pursue joint ventures to become a distributor
of existing water treatment technology products manufactured by others. We made this
determination based upon the business relationships that we had developed during the
period that we were involved in water desalination and believed that we could become a
distributor working together with established Israeli-based companies engaged in the water
In furtherance of our refocused efforts during 2011, on February 10, 2012, we entered into
a non-binding Memorandum of Understanding ("MOU") with Treatec21 Industries Ltd,
(treatec21.com/Eng/), an major Israeli-based private company ("Treatec"), fully
owned subsidiary for Yaad that listed on the Tel Aviv Stock Exchange ("TASE")
which contemplated the grant by Treatec of certain distribution rights to Treatec''s
products in New Zealand , Australia , Canada and the US . Shortly thereafter, on February
28, 2012, we entered into a non-binding MOU with Green Eng Ltd, (en.greeneng.biz/), an
Israeli company ("GreenEng") engaged in the water treatment industry. The
GreenEng MOU also contemplated the grant to the Company of non-exclusive distribution
rights to GreenEng's products in the US and Canada.
On December 17, 2012, we entered into a cooperation and distribution
agreement with Treatec (the "Treatec Distribution Agreement") , pursuant to
which we were granted the certain rights to distribute Treatec's water treatment products
in Australia ,New Zealand ,the United States and Canada ("North America") on a
non-exclusive basis. In connection with the Treatec Distribution Agreement and in order to
enhance our ability to develop a market presence for the Treatec products in the Australia
and New Zealand, we entered into a Representative Services Agreement dated February 21,
2013 with Mr. Tal Yoresh. Mr. Yoresh is a resident of Australia and has many years of
experience representing Israeli technology companies in both Australia and New Zealand.
See the discussion of the Treatec Distribution Agreement under "Material Terms of the
Treatec Agreement" below.
Treatec was organized under the laws of Israel in 2007. In May 2012, Treatec entered into
a five-year agreement with Shunde Dowell Co. Ltd, a Chinese corporation
("Dowell"), pursuant to which Dowell will use, on an exclusive basis, Treatec's
water treatment technology solutions in China, Macau and Hong Kong (the "Chinese
Market"). Treatec will serve as the exclusive contractor for Dowell's water treatment
projects in the Chinese Market, utilizing Treatec's Multi Stage Biological System
("MSBS"). Following the execution of the Dowell agreement, Dowell has commenced
projects with revenues of approximately $750,000 and in December 2012, Dowell announced
that a Treatec designed water treatment solution had been chosen for a major industrial
waste water treatment project in Guangdong, China, expected to be completed during the
first half of 2013. In addition, in July 2012, Treatec signed an agreement with the
Israeli Defense Ministry to provide initially for installation and maintenance on one
military base a compact wastewater treatment facility which facility and maintenance shall
generate approximately $300,000.
On January 17, 2013, we entered into a distribution agreement with GreenEng (the
"GreenEng Distribution Agreement"), pursuant to which the Company has been
granted the rights to distribute the GreenEng water treatment products and technology in
the United States on a non-exclusive basis. See the discussion of the GreenEng
Distribution Agreement under "Material Terms of the GreenEng Agreement" below.
We are presently evaluating several firms and persons that could serve as our sales and
marketing representative in the United States to acquire customers for both the Treatec
and GreenEng products in the U.S. market.
The water treatment products were developed and are manufactured in Israel and have been
successfully sold in Israel, Europe and China. We believe that we can sell and distribute
both the Treatec and GreenEng water treatment products and solutions successfully in North
America, subject to our ability to raise capital.
Our Water Treatment Business
Since early 2012, following our transition from our water desalinization
technology business, we have been fully involved in furtherance of our plan to serve as a
distributor of water treatment products manufactured by established companies in the water
treatment industry. During 2012, the Companys business activities involved business
and product research, securing marketing and distribution agreements, preparing a
comprehensive business and operating plan, evaluating the regulatory requirements and
engaging in related activities prerequisite to being a distributor of water treatment
products in certain markets.
During 2012, the Company consulted with third parties, including its shareholders and
technical persons known by or introduced to the Company having knowledge of the water
treatment industry, in order to evaluate competing water treatment technologies and
potential "partners" for which the Company could potentially serve as
distributor. These efforts resulted in the execution of Distribution Agreements with
Treatec21 and GreenEng, companies that we believe have competitive and innovative water
treatment technologies and products.
As discussed under "Recent Developments" above, the Company has successfully
entered into Distribution Agreements with both Treatec21 and GreenEng and plans to
evaluate other potential water treatment product manufacturers, whether based in Israel or
elsewhere, and enter into additional distribution agreements. Our initial focus will be to
successfully market and sell the Treatec and GreenEng water treatment products in North
America through direct sales and representatives, as well as in Australia and New Zealand
through its recently engaged representative, Mr. Tal Yoresh, a resident of Australia. See
the discussion under "Marketing Strategy-Water Treatment Technology Products"
below. The Company believes that the Treatec21 and GreenEng water treatment products, as
well as other water treatment technology products which we believe that we will be able to
distribute under new agreements, have the potential to enable us to be competitive in the
water treatment markets in which we operate.
Material Terms of the Treatec Agreement
Pursuant to the terms of the Company's Treatec Agreement, the Company will
serve as the representitive for Treatec's products, as described below, in Australia and
New Zealand. We believe that both countries, based upon their proximity to the Asian
markets are familiar with Treatec's products and growing presence in the Chinese Market.
We have also been designated as a distributor of all Treatec products in the North America
on a non-exclusive basis.
The Treatec Agreement provides for, among other things, a two (2) year term, subject to a
mutually agreed upon extension, during which time the parties shall work together in
identifying water treatment projects using Treatec's MSBS technology in the United States,
Australia and New Zealand (the "Territory"). Within twelve (12) months following
the December 17, 2012 date of the Treatec Agreement, the parties have agreed to commence
discussions with the view to granting the Company exclusivity in all or parts of the
Territory, based upon the cooperation during the initial twelve (12) month period.
ADBI's primary responsibility under the Treatec Agreement will involve locating suitable
Projects within the Territory. Treatec has agreed to provide the Company's sales and
marketing personnel and management with necessary training to understand the applicability
of and suitability of Treatec's technology and solutions for different types of customers.
After Treatec determines to proceed with a specific water treatment project, the Company
and Treatec will in good faith jointly negotiate each partys roles, responsibilities
and revenue share. The Treatec Agreement further provides that Treatec shall not be
required to provide any funding for or facilitate the arrangement for any funding for any
project, which role shall be the duty of the Company.
Material Terms of the GreenEng Agreement
The Company entered into the GreenEng Agreement on January 17, 2013,
pursuant to which the Company was granted distribution rights to the GreenEng products in
the United States on a non-exclusive basis. The GreenEng Agreement provides for among
other things, the following: (i) the agreement is for a term of three (3) years; (ii) the
Company shall purchase products from GreenEng pursuant to a schedule adopted by the
parties according to payment terms involving cash upon delivery or according to certain
credit terms; (iii) the Company and GreenEng shall cooperate on the promotion of marketing
and support of the GreenEng products; and (iv) the Company shall establish within six (6)
months of the date of the Agreement a marketing facility for the display and demonstration
of the GreenEng water treatment products and program.
To implement and complete the first phase of our business plan, having
finalized our licenses agreements with Treatec and GreenEng, we estimate that we will
require $400,000 to comply with EPA regulatory requirements during the next twelve months.
There can be no assurance that we will be successful in raising the requisite capital at
terms and conditions satisfactory to the Company, if at all, nor can there be any
assurance that we will be successful in negotiating similar distribution agreements. We do
not have any financing arrangements in place and we may not be able to secure such
financing when and as required. In the event that we are successful in executing license
agreements and raising necessary financing, of which there can be no assurance, we will
still be dependent upon our ability to successfully implement our business plan in a
We currently intend to raise the capital necessary to fund our business through the
private offering(s) of our common stock or units consisting of common stock and stock
purchase warrants although there can be no assurance that we will be successful in raising
equity capital in this manner. Obtaining the requisite capital would be subject to a
number of factors including, but not limited to, investor acceptance of our business
strategy, general investor sentiment, overall market conditions and the economy in
general. These factors may adversely affect the timing, amount, terms, or conditions of
any financing that we may obtain or make any additional financing unavailable to us.
Initially and for the foreseeable future, we do not plan to develop and/or produce any
water treatment products or components on our own. Rather, we plan to act as an exclusive
and non-exclusive distributor for certain water treatment products developed by
third-parties for sale in the United States, Canada, Australia and New Zealand, based upon
our existing license agreements with Treatec and GreenEng.
In furtherance of our business plan, we entered into distribution agreements with
Treatec21 Industries Ltd (treatec21.com/Eng/), an Israeli-based public company with
securities traded on the Tel Aviv Exchange, and in January 2013 with Green Eng Absolute
Green Engineering Ltd (en.greeneng.biz/), also an Israeli company. Both Treatec21 and
Green Eng are engaged in the water treatment industry with Treatec having significant
sales in Israel, China and Europe, while most of GreenEng sales are in Israel. While there
can be no assurance, the Company believes that it will be able to successfully enter into
licensing agreements with other companies in the water treatment industry during 2013.
Results of Operations during the three and six-months periods ended June 30,
2013 as compared to the three and six-months periods ended June 30, 2012
We have not generated any revenues since inception. We have operating
expenses related to general and administrative expenses being a public company and
interest expenses. During the three and six months ended June 30, 2013, we incurred a net
loss of $45,886 and $76,205, respectively, due to general and administrative expenses of
$26,234 and $42,563, respectively, and interest expenses of $19,652 and $33,642,
respectivley, compared to net losses of $15,650 and $32,342 during the same three and six
month periods in the prior year due to general and administrative expenses of $10,654 and
$24,185 and interest expenses of $4,996 and $8,157, respectively.
Liquidity and Capital Resources
At June 30, 2013, we had total assets of $9,462 consisting of $9,453 in cash
and $9 in prepaid expenses, compared to total assets of $3,809 at December 31, 2012
consisting of $2,900 in cash and $909 in prepaid expenses. At June 30, 2013, we had total
current liabilities of $148,194 consisting of $37,390 in accrued expenses and convertible
notes in the amount of $110,804 compared to total current liabilities of $116,479
consisting of accrued expenses of $31,383 and convertible notes of $85,096 at December 31,
2012. Our accumulated deficit as of June 30, 2013 was $2,390,330.
We used $38,447 in our operating activities during the six month period ended June 30,
2013, which was primarily due to a net loss of $76,205 offset by an increase in accounts
payable and accrued expenses of $6,007, amortization of debt discount of $24,851 and
$6,000 in donated services. We used $33,285 in our operating activities during the
three-month period ended June 30, 2012, which was due to a net loss of $33,242 and an
increase in prepaid expenses by $7,350 offset by an increase in accounts payable and
accrued expenses of $4,297 and debt discount amortization of $2,010.
We financed our negative cash flow from operations during the three and six months ended
June 30, 2013 through borrowings in the amount of $45,000 evidenced by convertible notes
compared to financing activities of $36,836 during the same period in the prior year. We
had no investing activities during the three and six months ended June 30, 2013 and 2012.
We do not have sufficient capital resources to effectuate our business plan. We estimate
that we will require $400,000 to comply with EPA regulatory requirements during the next
twelve months. Accordingly, we plan to raise these funds through a private offering of our
equity securities or through issuance of convertible debt instruments. There can be no
assurance that additional capital will be available to us. We currently have no
agreements, arrangements or understandings with any person to obtain funds through bank
loans, lines of credit or any other sources.
Our auditors have issued an opinion on our financial statements which includes a statement
describing our going concern status. This means that there is substantial doubt that we
can continue as an on-going business for the next twelve months unless we obtain
additional capital to pay our bills and meet our other financial obligations. This is
because we have not generated any revenues and no revenues are anticipated until we begin
marketing the product. Accordingly, we must raise capital from sources other than the
actual sale of the product. We must raise capital to implement our project and stay in
business. Even if we raise the maximum amount of money in this offering, we do not know
how long the money will last, however, we do believe it will last at least twelve months.
There are no limitations in our articles of incorporation on our ability to borrow funds
or raise funds through the issuance of restricted common stock. Our limited resources and
lack of operating history may make it difficult to do borrow funds or raise capital. Our
inability to borrow funds or raise funds through the issuance of restricted common stock
required to facilitate our business plan may have a material adverse effect on our
financial condition and future prospects. To the extent that debt financing ultimately
proves to be available, any borrowing will subject us to various risks traditionally
associated with indebtedness, including the risks of interest rate fluctuations and
insufficiency of cash flow to pay principal and interest.
In addition to the other information set forth in this report, you
should carefully consider the factors discussed in Part I, Item 1. Description
of Business, subheading "Risk Factors in our Annual Report on Form 10-K
for the year ended December 31, 2012, which could materially affect our business,
financial condition or future results. The risks described in our Annual Report on
Form 10-K are not the only risks facing our company. Additional risks and
uncertainties not currently known to us or that we currently deem to be immaterial also
may materially adversely affect our business, financial condition and/or operating